UK's FTSE 100 falls for fifth straight day as rate hike, inflation fears bite

FTSE 100 Drops for Fifth Consecutive Day Amid Inflation and Rate Fears

Market Performance and Key Drivers

Sept 10 (Reuters) - The main UK stock indexes closed at more than one-month lows on Thursday as the continued rise in crude oil prices fuelled inflation worries, while a firm U.S. producer prices reading further boosted chances of a future interest rate hike.

The blue-chip FTSE 100 index closed 0.57% lower at 10,608.92 points, its fifth straight day of declines. The midcap FTSE 250 slipped 0.92%, down for the fourth straight day.

Factors Impacting the FTSE Indexes

Energy and Commodities

• Both main FTSE indexes clocked their weakest close since late July as Brent crude futures were trading over $105 a barrel as the U.S. and Iran's continued attacks on shipping prompted markets to brace for supply disruptions. [O/R]

• Energy stocks offered some respite, rising 1%, with Shell and BP extending their rally, up 0.8% and 1.4% respectively.

Geopolitical and Political Influences

• U.S. President Donald Trump said he expected the conflict to end immediately after the November U.S. midterm elections, but the remark did little to calm investors.

Sector-Specific Movements

Industrial and Precious Metals

• Industrial metal miners dropped 4%, the biggest drag on the index after Reuters reported that the White House has yet to decide on refined copper tariffs as officials assess concerns that higher prices could raise manufacturing costs. [MET/L]

• Precious metal miners also dropped as gold prices took a hit following fresh U.S. inflation data that spurred interest rate hike fears.

Homebuilders and Financials

• Rate-sensitive homebuilders shed 2.15% as government bond yields climbed across the board.

• Yields on both 20-year and 30-year bonds hit a 28-year high and shorter-dated ones were at their highest since 2023.

• Index heavyweight HSBC declined more than 1.3% after the lender announced its CFO, Pam Kaur, would step down in 2027.

Retail and E-commerce

• Associated British Foods bottomed the FTSE 100 with a 7.9% slide after it forecast a decline in fourth-quarter like-for-like sales at budget fashion chain Primark.

• British e-commerce group THG lost 12.7% after warning of a slowdown in its quarterly revenue growth due to new EU import duties.

Interest Rate and Inflation Outlook

• Traders now await U.S. consumer inflation data and UK economic growth figures on Friday for more clues on interest rate directions.

• Markets are pricing in about a 70% chance the U.S. Federal Reserve will hike rates next week, but widely expect the Bank of England to hold, as per LSEG-compiled data.

• The European Central Bank raised interest rates for the second time this year on Thursday.

(Reporting by Anand Gopal and Purvi Agarwal in Bengaluru; Editing by Vijay Kishore and Andrew Heavens)